October 1, 2018 / 1:17 PM / 2 months ago

Automation, GST spell doom for India's traditional match factories

It’s hard to miss the message Sivakasi sends when driving into town after acres of dry, uncultivated land: this is a place for combustion. This town in the southern Indian state of Tamil Nadu built its reputation on fireworks, firecrackers and matches.

Sheets of matchbox labels are seen inside the Jai Shree Krishna printing press in Sivakasi, India, February 27, 2018. REUTERS/Abhishek N. Chinnappa/Files

Posters and graffiti advertise it on every wall and street corner. Painted images of matchbox labels, sparklers and skylines with fireworks in floral blaze jostle with pictures of Hindu deities.

Pyrotechnics has been the main source of economic strength here for more than a century, but the match business is in trouble, as are those who earn their living from it. A new tax regime and a growing preference for automated mass production of electronic and gas lighters could snuff them out.

Matches and matchboxes are more than tools to collectors, around the world and in India. They are objets d’art, and collectors seek out different designs like philatelists do stamps. Cultural anthropologists appreciate them too, including for their kitsch value, particularly in the way that their designers choose garish colours - notably yellow - and designs to make sure they stand out on a coffee table or a bookshelf or at a paan seller’s kiosk.

These tiny cardboard boxes costing anything between 50 paise and 2 rupees, are archives of history and popular and mythological iconography.

Pictures of factories, ships, tractors and bridges signify the importance of the modern industrial revolution while labels with “kisan” (“farmer”) or farm implements, chickens and roosters emphasize agriculture. Prints of lions, tigers, cheetahs and horses are a barely covert nod to male vigour and virility. Flowers, dolls, domesticated animals, babies and cartoon characters symbolise nature and family. These symbols are what clients demand, throughout India, the Middle East and Africa.

This variety and flair, often the result of painstaking handiwork, will fade, and could disappear. Small-business match production is moving toward full automation, and since 2000 has been incorporating more mechanized processes. Machines now often do the cutting, sorting, polishing and dipping of matches.

More recently, a new goods and services tax issued by Prime Minister Narendra Modi’s ruling Bharatiya Janata Party has increased costs for these smaller manufacturers and narrowed their profit margins.

M. Paramasivam, owner of the Manikandan Match Agencies in Kovilpatti, just outside Sivakasi, and president of the National Small Match Manufacturers Association, says that the rate is now 18 percent on mechanized factories as well as their semi-automated competitors.

“Semi-automated factories are unable to compete with fully automated firms in the market because of the differences in the cost of production,” said Paramasivam. “Semi-mechanized firms employ far more labour to produce the same output as a fully mechanized unit.”

What changed: automated factories paid 27 percent excise and value-added tax on their work. The smaller, semi-automated businesses that produce the most distinctive matchboxes and matches paid a 6 percent excise tax. Now both must pay 18 percent GST.

“Our orders are being cancelled because our matchboxes are getting more expensive while the fully industrial ones are becoming cheaper,” said Paramasivam. “At this rate, we might be wiped out.”

That means that scenes like the one on a typical day at the Manikandan Match Agencies floor might not last much longer. The factory floor hums with mechanical noise. The steady rut of a gyrating machine wheel is broken by a metallic, shutter-like sound. Tube lights hang from high ceilings. Matchbox trays spew from machines, falling into sacks. To the left of these machines, women sit across from each other on the floor, briskly gluing outer covers together and passing them on. Ahead of them, women fill paper trays with wooden matches.

A smaller room leads to a darker, grimier space reeking of sulphur and filled with the deafening sounds from the machines that dip and dry the matches. Thin wooden sticks, bought by the kilo, are first laid on the conveyer belt of the sorting machine, which sorts and polishes the matches with a coating of wax, making the stick flammable. These polished matches or “tilis” then move into another machine that dips them into the “masala”, or potassium chlorate mixture, which ignites when struck against the outer surface of the matchbox.

In a third room, huge sheets of printed labels are cut to size, the striking surface added, and sent to the women who assemble, fill and glue them. These filled, completed boxes, are then wrapped into sets of 10 and 12 and bundled together.

Survival means fully automating, which could put thousands of people out of work, said G. Kathiravan, owner of the Swarna match factory.

Around 400,000 people work in factories like these in Sivakasi and nearby towns. Kathiravan, who is also the secretary of the Tamil Nadu Match Manufacturers Association, said this workforce would be slashed to between 35,000 to 50,000 if the factories switch to fully mechanised processes.

“We are asking for GST rates to be brought down for small and medium enterprises precisely to avoid this,” Kathiravan said.

But the government says having a twin rate structure and differentiating between two kinds of matches is impractical in the GST regime, which emphasizes a uniform rate.

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“The objective of incentivising this sector is to be achieved by the state government or MSME (Micro, Small and Medium Enterprises) ministry through means other than the GST rates,” said G.D. Lohani, joint secretary (tax research unit) in India’s finance ministry.

A semi-mechanised match manufacturing unit requires approximately 200-250 labourers per machine a day while a fully automatic unit would require not more than 25 people per machine a day. Many of these workers are women, and have been working in the factories for 20 to 25 years.

One irony could dent the job cuts that loom: younger labour-pool talent is choosing to go to bigger cities like Bengaluru or Chennai for more education and better salaries. It’s fortunate for them, but it is one more sign that a distinctive Indian artistic tradition, enjoyed around the world, faces a fading future.

Editing by Robert MacMillan; This article is website-exclusive and cannot be reproduced without permission.

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